2013: Where will the Food be?

Yes, where exactly will the global F&B sector be thriving in the year 2013?

 This booming industry, which comprises farming, food production, distribution, retail and catering, has surpassed the value of $5.7 trillion USD since 2009 and is one of the major contributors to growth of all economies and has historically witnessed consistent growth, and the industry is expected to increase at a CAGR of 3.5 percent to $7 trillion by 2014. With such a compelling projection, it is no surprise that everyone wants a bite of this cake. But where do you start? Well, the good people at Socialwalk F&B Team have done the research for you, just read ahead and plot your reign for the F&B throne this 2013!

India

India is one of the largest countries in the world, with a growing population of 1.2 billion people. While India supplies the majority of its own food for consumption, the country is a growing market for processed food imports, which are becoming more popular with the younger population, especially in urban areas. Changing food consumption patterns of India’s population is expected to not only increase consumption volume in absolute terms to US$230 billion by 2013 but also shift people’s diet qualitatively towards richer, processed foods, which will force increased commodity requirements.

Tips for getting into the market:

1.      Supply Chain: The food supply chain in India once complex and less developed has seen notable development since the advent of global brands in the Indian F&B sector. Many large F&B Players have favoured direct procurement by way of contract farming to source key products. While contracting firms benefit from more assured supplies and reasonable control over quality and other specifications, this system does have its risks. In India, contracting agreements are often verbal or informal in nature, and should there be a breach, neither party will be keen to contest these issues in court, where litigation can be an extremely slow process. 

 

Source: Athena Informics

2.      Business partner: It is crucial that time and money are allocated towards identifying the right local partners and companies, which can help establish a brand in the Indian market.  Key factors to consider when selecting a business partner:

·         The suitability of their target market for your product.

·         Flexibility and adaptability of your business partner. Agents and importers / distributors that are smaller tend to be more adaptable than larger companies.

·         If there are any conflicts of interest with other products that the agent / importer / distributor is involved with.

·         Reputation through checking with their associations, clients and bankers.

As we know how important suitability and reliability is, Socialwalk can help you find the perfect business match with our expanding database of buyers and suppliers at http://www.socialwalk.com/

3.      Visits and trade shows: India has a complex food and beverage market so it is recommended that companies interested in exporting to India visit the country itself and visit or participate in major trade shows.

See our list of upcoming F&B trade shows here!

4.      Advice on packaging: Packaging sizes are very important, usually for Indian consumers, the bigger the better. Indian importers and distributors generally have the best knowledge and should be consulted when making packaging decisions.

5.      Regulations: Import tariffs vary depending on the product, but in general are quite high. Furthermore, the tariff system can be complex as there are a range of taxes which must be paid on imports. The main duties and tariffs are:

·         Basic Duty: This tax is applicable to most imported goods and the rate is 30 percent for most products.

·         Additional Duty (AD) or Countervailing Duty (CVD): An additional duty to match the domestic Central Value Added Tax (CENVAT) for goods produced and manufactured in India. The CVD rate is based on a product’s Maximum Retail Price (MRP).

·         Special Additional Duty (SAD) or Special Countervailing Duty (SCVD): A 4 percent duty on most imported products. This tax is designed to match domestic taxes such as Sales Tax and Value Added Tax.

·         Due to food inflation concerns and unpredictable weather that affects agriculture, there are certain products that are exempt from import tariffs such as wheat, rice, corn and crude vegetable oils.

6.      Opportunities: A positive growth rate for overall food and beverage consumption is expected for the next few years, in particular:

·         Processed food

·         Milk and dairy        

·         Beverages, including wine

·         Fish and seafood

Source: trade.indiamart.com

Source: thediningtable.sg

References:1. http://www.businessvibes.com/blog/facts-and-figures-global-food-and-beverage-industry2. http://www.nzte.govt.nz/explore-export-markets/market-research-by-industry/Food-and-beverage/Pages/Food-and-Beverage-Market-India-January-2012.aspx3. http://www.athenainfonomics.in/assets/F&B%20Food%20Service%20in%20India.pdf4. http://www.ehospitalitytimes.com/?p=558465. http://lmd.lk/2011/05/01/leading-edge-4/6. http://www.sundaytimes.lk/120122/BusinessTimes/bt10.html